Shares in Soco International (LON:SIA) were down 19% in reaction to news that the company decided to plug and abandon an appraisal well at one of its main oil and gas projects in Vietnam.
The oil and gas producer and FTSE 250 constituent explained that the Giac Den appraisal well, TGD-2X, flowed at sub-commercial rates.
The TGD-2X well was drilled on the flank of the structure, whereas both the TGD-1X and TGD-1XST wells were on the crest of the structure.
Post drilling analysis continues as the well is being prepared for abandonment and a decision as to the future of the TGD appraisal area will follow.
“When we embarked on the TGD exploration campaign, we realized that it would be difficult and technically challenging.
“Further analysis of the data gathered from the TGD-2X well will determine our path forward for this area,” said president and chief executive of Soco International.
Meanwhile, the first two development wells on the Te Giac Trang development offshore Vietnam have been completed. Preliminary log analysis of the first well, the TGT-H1-1P has indicated that the well encountered the top of the target reservoir horizon on prognosis.
The second well, the TGT-H1-2P, encountered the reservoir section approximately 10 metres higher in the section than the pre-drill prognosis.
Soco said this strongly supported the favourable structural reservoir analysis.
Both wells are being suspended and will become producing wells upon start-up of production in mid 2011, which is expected to be at about 55,000 barrels of oil per day during the first phase.
The company has simultaneously announced the spudding of the Kinganga-Nyanya-1 exploration well on the previously designated "D" prospect of the Nganzi block, onshore the Democratic Republic of Congo, which occurred on 1 October.
It is expected to take approximately 20 days to drill to total depth.
Soco International has a 30.5% stake in the Giac Den exploration block.